Microsoft just officially unveiled its new music service, Xbox Music, which it hopes will compete with iTunes, Spotify, and everything else like them. Rolling out on October 26, the new Microsoft Xbox Music service is divided into three parts, explained Xbox Music general manager Jerry Johnson and director of industry relations Christina Calio to Evolver.fm during a hands-on demonstration of the service in Manhattan last week.

First, every copy of Windows 8 for laptop, desktop, and Windows 8 RT tablet will ship with a free, ad-supported music service sort of like Spotify, with unlimited access to over 18 million tracks, that includes an artist radio feature. Second, Microsoft will sell subscriptions at the usual $10/month price, allowing these 18-million-plus tracks (in the U.S. version) to be played on Xbox, Windows Phone, and eventually iOS and Android, in addition to tablets and computers. Finally, XBox music will sell songs as downloads.

We know.

From MSN Music to PlaysForSure to Zune, Microsoft’s musical offering have been as flailing and ineffectual as Apple’s have been profitable and world-changing. Xbox Music could be headed down that same road to nowhere, for all we know. However, Microsoft has several factors working in its favor, even if history is definitely not one of them:

1. Bundling

Microsoft will bundle unlimited, free, ad-supported music with every Windows 8 desktop and laptop. Anyone who doubts the efficacy of this strategy should research what happened to Netscape after Microsoft did the same with its Internet Explorer browser. When a user double-clicks on an MP3, the Xbox Music player will field that request… and look, there’s 18 million full-length tracks, sitting right there in the same software.

2. Credit Cards

Microsoft’s Xbox Live already has over 40 million accounts worldwide, and Xbox Music is launching its free service in 15 countries and the paid Xbox Music service in 22. All of those account holders will be able to use their credit cards on file or in-store gift cards to upgrade to Xbox Music Pass, while the points accrued by Xbox Live gamers can buy songs. That’s a lot of pre-existing relationships with a lot of consumers — just like Apple has with iTunes.

3. Microsoft Is Large And It Contains Multitudes.

Johnson told us he doesn’t think free, ad-supported music is a sustainable business. Guess what? If you’re Microsoft, that doesn’t matter — at least not the way it does to its pure-play music competitors, which have built their entire businesses around the concept. Just like when Best Buy and other big box stores started selling CDs as a loss-leader to get people in the door, Microsoft can afford to do the same with free, on-demand music, and let the chips fall where they may.

4. Advertising and Marketing

The same overarching ad sales team that works for Bing and elsewhere will sell ads for the ad-supported version of Xbox Music. In addition, the company plans to spend significantly to market Xbox as an entertainment (as opposed to a purely-for-gaming) platform.

5. Xboxes Are Already for More Than Just Games.

Although you’d have to be a gamer to know this, Xboxes can play Netflix movies and do other non-gaming stuff. Something like half of all Xbox usage is for non-gaming, said Johnson, so the idea of running a music service there (which also runs on Windows) isn’t so crazy.

6. Unlike Google, Microsoft Has an Answer to Apple Airplay.

Apple is stealing Android people because Google doesn’t have a good solution for streaming music and video from phones to speakers and screens. We saw a Windows Phone trigger music for playback on an Xbox via Microsoft SmartGlass. It’s not as far-reaching as Apple’s solution, but it’s something.

7. It’s Coming to iOS and Android.

Microsoft wouldn’t say when this is happening, but confirmed that it is. At that point, if you already have Windows 8 and/or an Xbox, you might go for Xbox Music even if you don’t rock a Windows Phone. This will be a lot of people.

8. Comprehensiveness

There’s no free Pandora-style radio for mobile here; desktop and tablet users will be able to access free radio stations based on artists that run on Microsoft’s own special sauce, called Smart DJ. However, free on-demand streaming (on Windows 8), subscriptions, and a la carte song sales are all included here, which should appeal to a fairly wide swath of listeners. According to Microsoft’s announcement, Xbox Music is “the first all-in-one music service that gives you the freedom to stream custom-created playlists for free, subscribe to all the music you want or download-to-own your favorite songs.” If you subscribe, all of your stuff (including previous MP3s) will be on all your platforms, thanks to the cloud, with the option to download songs to local storage. Next year, the cloud feature will accept songs not available in Xbox Music, too.

9. The Search Was Good.

Most of the time, searching for “The Fall” in a music service returns all sorts of stuff, including the soundtrack to some movie called Legends of the Fall. Xbox Music identified The Fall properly, and started playing “Blindness.”

10. Microsoft could do apps a la Spotify, and possibly beyond.

“Spotify does that… things like the We Are Hunted app are great for discovery, it’s driving people into that,” said Johnson. “We’re an app platform. That’s what we do with Xbox, that’s what we’ve done with games. I look at music as something that I’m looking forward to the point when it’s not just coming through tuners, but it actually fuels all your entertainment experiences.” This is somewhat cryptic, but we take it to mean that in addition to apps like Vevo, Last.fm, and iHeartRadio, which already run on Xbox, Microsoft wants to power music apps and hopes Xbox Music can also do stuff like pump personalized music into videogames.

Johnson told us that opinion at Microsoft was split on whether the Zune sharing feature, which let users zap songs to each other from device to device, should be included in Xbox Music. He confirmed that it’s possible that Microsoft would resurrect that feature, which we think would be a good idea.

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Microsoft just officially unveiled its new music service, Xbox Music, which it hopes will compete with iTunes, Spotify, and everything else like them. Rolling out on October 26, the new Microsoft Xbox Music service is divided into three parts, explained Xbox Music general manager Jerry Johnson and director of industry relations Christina Calio to Evolver.fm during a hands-on demonstration of the service in Manhattan last week.